Assetz Infrastructure Pvt. Ltd. Vs DCIT (ITAT Bangalore)
There is no dispute with regard to the fact that the interest free advances received from customers was available with the assessee to the tune of Rs.16.96 crores as noticed by Ld CIT(A) at page 28 of his order, i.e., Rs.14.22 crores under Schedule V and Rs.2.74 crores under Schedule X, both aggregating to Rs.16.96 crores. The interest free loans given to subsidiary companies stand at Rs.10.26 crores. Hence the assessee has contended that the interest free funds available with it has been used to make interest free loans to the subsidiaries. The Ld A.R placed his reliance on the decision rendered by Hon’ble Bombay High Court in the case of CIT vs. HDFC Bank Ltd (2014)(49 taxmann.com 335)(Bom) in which it was held that if the own funds and “interest free funds” available with the assessee is more than the investment in tax free securities, then it should be presumed that the said investments have been made out of interest free funds available with the assessee.
Since the interest free funds available with the assessee is more than the interest free loans given to subsidiaries, it should have to be presumed that the loans have been given out of interest free funds. Accordingly, following the decision rendered by the Hon’ble jurisdictional Karnataka High Court (referred supra), we set aside the order passed by Ld CIT(A) on this issue and direct the AO to delete this disallowance.
